LONDON, March 22 (Reuters) - Greece’s largest refiner is finding it easier to secure crude as improving credit conditions allow suppliers to cautiously return, although it still must pay a premium.

Hellenic Petroleum, was dealt a double body blow when it was forced to abandon cheap Iranian oil imports due to sanctions at the height of the Greek economic crisis when liquidity was squeezed.

For the past year, the refiner has been reliant mostly on deliveries from trading houses Vitol and Glencore. Now, BP and other, smaller players are dealing with Hellenic, say traders, and others may follow.

“Credit conditions have significantly improved since the recent EU/IMF resolutions on Greece and the disbursement of the bailout tranche last December,” the spokesman for Hellenic said.

Towards the end of last year, the euro zone finalised a 50 billion euro package for Greek banks and Hellenic refinanced 1.2 billion euro in loans.

VICTIM

Hellenic, which has a refining capacity of 310,000 barrels per day, fell victim to the Greek financial crisis as international banks stopped dealing with most Greek institutions and their letters of credit, fearing defaults.

Iran was the only country that continued to deal with Greece on the open credit basis, a standard practice in the industry when payments for oil are due several months after the delivery to allow refiners to generate cash from selling products.

However, Western sanctions on Iran cut off vital crude flows last spring, which accounted for up to 30 percent of Hellenic’s oil supplies.

For most of the second half of last year Hellenic relied on Vitol and Glencore, which supplied mostly Russian Urals and some Iraqi Basra Light crude grades.

Hellenic said while the switch was costly it is not facing any issues with crude supply.

“Adverse factors affecting results were the increased crude oil cost due to suppliers switching and Greek crisis related risk,” the company said in financial disclosures.

Hellenic’s year-on-year operating profit and cash flows fell by a third in 2012 compared with 2011.

HEFTY PREMIUMS

Open credit is difficult to secure as it requires the counterparty to take on the full risk of potential non-payment.

Most traders pulled the plug on supplies to Greece with only Glencore and Vitol, as suppliers of last resort, taking on the risk without any bank backing in case of non-payment - but charging hefty premiums.

Glencore still accounts for the bulk of deliveries with open credit of around $200 million, while Vitol’s presence has diminished over the past months, several industry sources said.

With open credit options limited, Hellenic had to find other avenues with cash payments being one of the main options.

“They are trying to use 100 percent of their cash availability,” one Greek oil executive said, “But they need to buy more than they can handle with cash.”

Swapping crude imports for product exports emerged as another option.

BP engaged in such trade earlier this year, several trading and shipping sources said. BP declined to comment.

Hellenic said it does not engage in barter trade, but said that some deals on products sales and crude purchases are often concluded between the same parties.

“With exports accounting for more than 50 percent of our total sales... it often occurs that we are dealing with the same counterparty on certain crude purchases and products sales,” it said.

Trading and shipping sources said one firm was swapping 60,000 tonnes of ultra-low sulphur diesel per month against crude supplies to Hellenic. A Russian trader has been swapping straight-run fuel oil delivered to Hellenic for refining against finished products.

“Over the past two to three months, I have seen increased activity from products-focused people who were saying they are keen to get involved in crude to supply Greece because swaps are getting attractive,” one trading source said.

A trader at a small trading house, which used to sell to Hellenic, said that he hoped to resume trade in the next few months as banks are re-evaluating Greek risks.